4 Steps to Start Your Own Food Business

1. Establish a niche: "You have to know why your cake is better than all the others out there," says Hall. "A cute name? Unique packaging? Is it the first completely organic carrot cake?" McRae learned her value from her customers: "I delivered—and I found out I was the only one in my neighborhood who did."

2. Find taste-testers: Call gourmet markets near you, Hall suggests, and ask them to try your cake—if they love it, they might place an order. McRae started out making pies for her running club; so many people placed orders and told friends that she needed a brochure.

3. Figure out your price: Go to local bakeries to check out how much your competitors charge. Or be bold: "I called other bakers and asked how they came up with their prices," says McRae.

4. Learn to advertise on the cheap: Google Adwords worked for McRae—the service allows you to target an area (for example, the New York City region) and the amount per day you're willing to spend. Social networking sites are a free way to stay in touch with customers—"Many are my friends on Facebook, so they see my posts. Soon I'll write, 'Get your holiday orders in!' and they'll probably read it." Hall suggests approaching stores with promotional discount offers: "A lot of places let you do it, and it really drives sales."

5. Write a business plan: To see samples from Jim Horan, creator of the One Page Business Plan, go to our 6-part guide for entrepreneurs. And check out Cooking Up a Business: Lessons from Food Lovers Who Turned Their Passion into a Career, and How You Can, Too by former O magazine editor Rachel Hofstetter.